In today's Breakfast With Dave note, Rosenberg declares the death of the painful deleveraging cycle.

DELEVERAGING ... R.I.P.

Well, one headwind is now behind us. The consumer deleveraging cycle. This by no means suggests we are entering into a whole new credit cycle. But at the margin, the inability to access loans that plagued the consumer for so long has dissipated rather substantially of late. And just as the labour market embarks on an improving trend and just as the fiscal squeeze enters into its final stage. The building blocks for the consumer to grab the torch are being put together with each and every passing data point of late. Don't fight it. Embrace it.

The latest data point was the consumer credit data from the Fed for May — rising $19.6 billion (the consensus was +12.5 billion) or at an 8.3% annual rate, in the fastest pace of borrowing since May 2012. The gains were broad based with revolving credit up at a 9.3% annual rate, the strongest advance since May last year, and nonrevolving credit was also up at a 7.9% annual rate, but we know that in recent years, this was more of a federally-assisted student loan story than a tale about the consumer sector again willing to tap the credit lines for spending purposes. In fact, stripping out the federal government, credit lines for spending purposes. In fact, stripping out the federal government, credit surged at an 8.9% annual rate and the YOY trend ticked up to +2.5%.

At the banks, consumer credit is up 2.8% from year-ago levels. Consumer credit extended by savings institutions is up 6%. Credit unions have lent out funds to the consumer sector at a 10.2% pace over the past year (thanks to George Bailey!). And asset pools backed by consumer credit are also up 2.6%. Are these ripping credit numbers? Absolutely not. The new era is still one of prudence and frugality compared with the insanity and excesses of the last cycle. But deflationary deleveraging this ain't.